On one measure, T-Mobile US is now as profitable as AT&T - return on capital employed (ROCE). In 2016, the subsidiary of Deutsche Telekom made a ROCE of 6.9%, marginally ahead of AT&T. However, for most investors that represents a pretty poor performance. Over the past seven years, only Verizon has consistently made a respectable ROCE.
The US telecoms industry is entering a pivotal phase in its development. With the laissez-faire Trump administration, the US telecoms market may finally consolidate from four main players to three. Although intense competition seems to be good for consumers, at least in the short term, the aggressive campaign to win market share by T-Mobile US has weakened the profitability of AT&T and Verizon, while causing more pain for long-suffering Sprint.
Having already acquired DirecTV, AT&T is looking to merge with Time Warner as it seeks to become a vertically-integrated provider of consumer entertainment. Verizon is also pushing into content and advertising, albeit through smaller acquisitions, such as the ongoing purchase of parts of Yahoo!, and in-house development.
To explore the case for consolidation, Pringle Media has just published a report tracking and comparing the key financial metrics of AT&T, Verizon, Sprint and T-Mobile US over the past seven years.